Wednesday, November 7, 2018

Megatrends in Global Consumption: The Future Consumer

Tech-savvy youngsters and emerging economies are driving the future of global consumption. Get more details about the future of consumer behaviour inside.

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Erwan Rambourg

Global Co-Head of Consumer and Retail Research

New mega-trends are driving global consumption. Tech-savvy youngsters, households whose children have left home, and emerging economies have become influential new groups of consumers. But they all spend on maintaining their health, and all may be more interested in experiences than acquiring goods.

The shape of the world’s population is changing quickly. In the west, record numbers are reaching retirement, while in emerging economies, young populations are growing rapidly.

Even in ageing populations, young consumers will matter more and more. In the US and China, the world’s biggest economies, the modal age is under 30, so over the next decade this group will reach the prime consumption ages of 35 to 54, with more disposable income.

Three new consumer groups have emerged from these changes:

  • The young are ‘digital natives’, grown up using the internet.  They are more likely to shop online, stream media and seek bargains, but less likely to use cash. HSBC surveys found that only 20% of US millennials do not use e-commerce sites at least once a week - compared to a majority of 51 to 65 year-olds - and their top purchases are clothes, accessories and electronics.

    This generation willingly adopts new consumption forms, from ride-hailing apps, crowd-funding or driverless-cars to virtual-reality. And younger consumers in the west have different attitudes to ownership, renting cars, homes or clothes.
  • The ‘empty nesters’ are older consumers whose children have left the nest, allowing them to spend on upgrading their way of life. These households have often repaid mortgages and purchased goods such as cars and washing machines; as their children leave they buy better quality, improve their homes – or buy experiences such as travel.
  • Emerging markets are not only growing financially, they have their own spending patterns. Some two billion consumers there will buy via smartphones in coming years. The rise of empty-nesters is evident here too, especially in China, where older generations have spending power for the first time and more women work, boosting household incomes.

    Forty-plus Chinese households are the largest and fastest-growing consumer market on earth.

But all three groups of consumers are getting wealthier and want to be healthier. They care about how they look and feel and increasingly have the means to do something about it. They buy sporting goods, join gyms, undergo cosmetic surgery, seek health checks – and smoke less.

And it seems that wealthier people aren’t as concerned about buying things so much as they are about living experiences. They want to have fun, including eating out, taking cruises and traveling, or visiting casinos.

But besides these demographic shifts, wealth is moving from developed to emerging markets and technology access will likely make spending more similar between income groups. 

These mega-trends are unstoppable, driven by demographic changes in the global economy, but they have implications for manufacturers of products and services the world over. 

Disclosure and disclaimer

Analyst Certification

The following analyst(s), economist(s), or strategist(s) who is(are) primarily responsible for this report, including any analyst(s) whose name(s) appear(s) as author of an individual section or sections of the report and any analyst(s) named as the covering analyst(s) of a subsidiary company in a sum-of-the-parts valuation certifies(y) that the opinion(s) on the subject security(ies) or issuer(s), any views or forecasts expressed in the section(s) of which such individual(s) is(are) named as author(s), and any other views or forecasts expressed herein, including any views expressed on the back page of the research report, accurately reflect their personal view(s) and that no part of their compensation was, is or will be directly or indirectly related to the specific recommendation(s) or views contained in this research report: Erwan Rambourg 

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